Construction is a business that uses large, expensive equipment to get the job done. When it comes to getting equipment for your company, you have the option of leasing or buying. This is an important decision that can cost small businesses a lot of money. Why does equipment leasing work out better in the long run? Here is a look at why.
Leasing your equipment means you do not lock yourself into a long-term commitment, which gives you the flexibility to conduct business on your terms. For example, if there is an expensive piece of machinery you only use a few times a year, leasing means you only pay for it when you are using it. Some rental companies even offer a deposit return if you bring the equipment back in good condition.
When you first look at the numbers, you may wonder why monthly payments come out on top verses buying the equipment you need outright. Two costs you get to ignore are maintenance and replacement parts. When you lease equipment, the owning company takes care of upkeep and sometimes cleaning. Insurance is another cost you can go a bit easier on since you only need to worry about operational costs.
When you purchase equipment, you are in charge of looking for a replacement when something new comes out. This involves finding a buyer for your current machinery and then researching a replacement. When you engage in equipment leasing, then you can end your contract and lease something new whenever there’s an equipment upgrade.
No Credit Risk
Your credit is important in two ways when it comes to equipment leasing. The first is if your business is small or young, you might not have great credit. That means when you go to secure a loan for buying your equipment, you might not be able to get what you need. Leasing is possible even without stellar credit. Secondly, every time your credit is checked, it can reduce it slightly. Getting a check every time you buy more equipment can hurt the availability of your future financing.
Leasing your heavy equipment is a great way to protect your business from long-term costs. You gain flexibility, save money, upgrade quickly and reduce your credit risk when you lease equipment instead of buying it outright. Equipment leasing is something to consider if you run your own construction company and want to have options that help your business grow.